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How would it affect you if you could no longer write off the interest you pay on your mortgage?
According to panelists at Friday’s housing forum hosted by Zillow and the University of Southern California’s Lusk Center for Real Estate:

The burgeoning federal debt makes it unlikely that the mortgage interest tax deduction will survive in its present form. Of course, any proposed changes to the tax break for homeowners will spark a fierce debate over the fundamentals of the U.S. housing market, the value of home ownership, and consumer behavior.

“Fierce debate” he says? I’d call it a jobs-killer! But then again, I’m in real estate. Change is never easy, but when it hits our pocketbooks and the government, it really hits home. I advise my clients to educate themselves, talk to their tax professional and view the tax benefits icing on the cake. Knowing the long-term financial upside leaves them feeling good and more secure as they move forward with their biggest single purchase.

“I think it’s entirely likely that something big is going to happen (with the MID) starting next year with either administration,” said Jason Gold, director and senior fellow at the Washington, D.C.-based Progressive Policy Institute, an independent think tank.

A Congressional contingent advocates for the elimination of the mortgage interest deduction to help address the nation’s debt and budget deficit. Obviously things must be done to right the problem, but sticking it to a Middle Class whose beginning to feel the effects of a post-crisis housing market recovery seems a bit harsh. At the end of this year, a series of tax increases and spending cuts are scheduled to go into effect automatically unless Congress acts to prevent or alter them. Revamping the mortgage interest deduction is on the table as a way to head off that “fiscal cliff” scenario. (I wonder how many of those guys have a mortgage.)

Two years ago, a bipartisan deficit reduction commission recommended scaling back the mortgage interest deduction, which is currently capped at mortgages worth up to $1 million for both principal and second homes and home equity debt up to $100,000 and the deduction is only for taxpayers who itemize.
The Simpson-Bowles commission proposed turning the deduction into a 12 percent non-refundable tax credit available to all taxpayers, capping eligibility to mortgages worth up to $500,000, and eliminating the deduction on interest from second homes and home equity debt.

Though that seems more reasonable to me than the first idea, the National Association of Realtors has consistently defended the mortgage interest deduction in its current form.

Highly critical of the recommendation and claiming any changes to the MID could depreciate home prices by up to 15 percent, they are promising to “remain vigilant in opposing any plan that modifies or excludes the deductibility of mortgage interest.”

So… we’re back to whose going to pay down the debt? And how.

The MID is a “tax expenditure,” meaning its cost must either be made up through higher taxes elsewhere or by adding to the debt, and it costs the government about $90 billion a year. Richard Green, the director of the USC Lusk Center for Real Estate, told forum attendees that reforming the MID is necessary for fiscal sustainability. “We need to get revenue,” Green said. “You need to make a judgment about what’s better or worse for the economy. In my opinion, it’s better to do it with tax expenditures, rather than rates, though you may have to do both to get to where we need to be.”
Because mortgage interest rates are currently so low, he added, “This may be an opportunity to do less damage by reforming the mortgage interest deduction than at other times.”

(I wonder what cuts would make this guy feel the pinch.)
The mortgage interest deduction is particularly polarizing because of the disconnect between how people use it and how it is perceived. Green gave the example of Texas where most people do not itemize their taxes (only about 30% of taxpayers do) so they cannot take advantage of the MID. This line of thought perplexes me. So… if more Texans itemized their taxes it would make things fairer? or does he mean that if they actually knew they could they would, adding to the deficit? And haven’t Texans done enough of that? 😉
No matter how the chad falls in the next three weeks, watch for ongoing and loud debates over the Mortgage Interest Deduction. *covers ears*

Source: Inman News, Andrea V. Brambila, Monday October 15, 2012

Are you a first-time homebuyer but missed that big tax credit? Are you tired of paying rent or is your rent being raised to astronomical limits? So let me ask you this… If you thought you could get a good deal and a $2000 tax credit, would you like to own a house in Denver? Good news.
The City and County of Denver announced a new Mortgage Credit Certificate program that enables qualified borrowers to receive an annual federal income tax credit equal to 30 percent of the yearly interest paid on their mortgage loan, up to $2,000 annually, the city announced Tuesday.
“For many families, home ownership is a primary method of asset building and saving for the future,” says Denver Mayor Michael Hancock. “We’re providing a financial boost to individuals and families while increasing home ownership opportunities and the overall strength and vitality of Denver neighborhoods.” Lenders can use the estimated amount of the credit on a monthly basis as additional income to help a potential borrower qualify for a loan, the city said.
There are stipulations to the program. To qualify, borrowers must purchase a residence in the City and County of Denver and income restrictions apply ($79,300 for one or two persons and $91,195 for three or more). The maximum allowable purchase price for a home is $370,252, although higher income and purchase price limits are available in targeted areas. Participants cannot have owned a home in the past three years, except in targeted areas and for qualifying veterans.
Only certain lenders are approved to participate in Denver’s Mortgage Credit Certificate program and Paul Orrell at Megastar Financial, one of my favorites, is among them. Click here if you’d like more information about the Denver Mortgage Credit Certificate program, then shoot me an email. I’d be glad to go over your options.


Hopefully the first is a long way off, but the second is looming once again. Whether you have an accountant on staff, go to the national tax franchise or are a DIY kinda guy/gal, some of these resources might help.
I learned a long time ago, never to attempt doing my own hair or my taxes, but as an independently-minded broad I want to arm myself with as much info as I can as I head into tax season, either to feel a sense of power or just to drive my tax guy crazy. So, as you sort through your envelopes, spread sheets, baskets, couch cushions and files, trying to squeeze every dime out of your tax return, check out these sites.
Because…not all of us keep our cash in the Caymans.
American Opportunity Tax Credit
Charitable Donation Tax Deduction
Tax Credit for Buying a Home (My fav!)
3 Tips to Maximize Itemized Deductions
Home Equity Loan Deduction
• Can I Deduct a Donation Made on a Credit Card?
Home Office Deduction
You can explore further by going to the IRS site and here are some lists created by my “staff CPA” or on. http://taxes.about.com/od/deductionscredits/Deductions_Credits.htm

Take heart, my friends, as you stay up into the wee hours, surrounded by piles and blinded by trying to read that faded ink…No matter how it ends up or which way the tax check is written, it’s your very own contribution toward reducing the national debt.
*laughs wildly*